Click Fraud Solution: The Market Will Solve The Problem

Google CEO Eric Schmidt talks about how pay-per-click model is self-correcting:

“Eventually, the price that the advertiser is willing to pay for the conversion will decline, because the advertiser will realize that these are bad clicks, in other words, the value of the ad declines, so over some amount of time, the system is in-fact, self-correcting. In fact, there is a perfect economic solution which is to let it happen”

So, let the advertiser beware?

There are two sides to this issue. Google may well be putting the onus on the advertiser, which seems unfair as the advertiser has little control over the process. However it is also true that the advertiser bears responsibility for monitoring and adjusting their advertising spend. Don’t like the deal? Don’t pay the prices. There will always be those who pay top price for little return. Is it up to the ad seller to prevent them doing that? In this respect, Schmidt is right to say the market will self-correct.

The question of fraud is difficult because it is so hard to measure. Even the word “fraud” is a loaded term, especially when we’re not sure which clicks Google is (and isn’t) counting. Is a user who uses an  ad as a bookmark fraud? How about web servers that send multiple requests?

However, Google do have a public relations issue on their hands. It is important for their system to be seen as fair.

  1. ChrisChris07-12-2006

    I viewed the interview in question as very disheartening as an Adwords user. The Google CEO just seemed far to nonchaluent(sp?) about the whole situation.

  2. Peter Da VanzoPeter Da Vanzo07-12-2006

    It certainly came across that way, although I wonder about the context.

    I doubt Google are doing nothing about click-fraud. It is one of their identified risks.

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